February 2016

From experience I have become a great believer in technology and how it can transform markets and whole industries. Velocys has something really special and I believe it has the potential to transform gas-to-liquids to serve a number of material markets. I am immensely excited to be on board at such a time, to help drive the company to deliver this future.

Within the next 12 months we plan to have our commercial reference plant in Oklahoma City fully operational and in the global market shop window. This will be a commercially transformational event for Velocys. In parallel we are fully engaged and working on the next transformational steps, two and three, and excellent progress is being made.

I cannot deny that coming back to the petrochemical sector has been like coming home. Although very familiar to me, it is even more important today in our competitive world, to have great technology. Our global market leading position combined with our impressive investor base creates a truly differentiated and robust platform to commercialise our business.

It is very healthy, at such times of very low oil price, to review and test our current portfolio of opportunities and we plan to do this within a broader strategic review of the business. My approach, and one I will stay faithful to, is to continuously drive simplicity, focus, delivery and robustness into everything we do. We will apply this approach to our strategy, our routes to market and in how we conduct every part of our business. In 2016 we plan to deliver significant results, even whilst we have a challenging environment. Although our major shareholders retain their strategic view of their investment and remain supportive, they rightly have huge expectations for our delivery of sustainable value growth.

Touring all the company facilities, meeting our people and major partners over the last few weeks has further reinforced my excitement for the opportunity we have and how I can best support a hugely talented team. What struck me most was the unabashed, and to a person, deep craving for success and the will to make it happen. Quite formidable. Although we cannot abolish the market cycles, we must learn how to anticipate and thrive regardless. Our strategy and business must implicitly have robustness so that we can embrace the cycles and strive to deliver best in class performance. I, together with the rest of the company's senior management team, look forward to setting out our strategic vision in the coming months.

Finally I want to thank everyone for such a warm welcome to Velocys.

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David Pummell, CEO

What's new?

Appointment of David Pummell as CEO

On 6 January David Pummell was appointed as CEO of Velocys. With over 30 years of energy and oil industry experience, including 22 years at BP, David joined Velocys from ACAL Energy Ltd, a private equity backed fuel cell technology company developing products for the automotive and stationary power sectors, where he was CEO. Read more...

Other directorate changes

On 21 November, Non-executive Director Andrew Jamieson stepped down from the Board in order to devote more time to his other interests, including his recent appointment to the Board of Gaztransport &Technigaz. Read more…  On 8 December Ross Allonby was appointed to Velocys' Board as Non-executive Director. Mr Allonby is a Founder, Managing Partner and CEO/CIO of First River Capital Partners LLP, an integrated advisory, origination, structuring and investment management business providing companies in emerging markets with debt financing solutions.  Read more…

ENVIA Energy gas-to-liquids plant project progress

On 4 February ENVIA Energy's EPC contractor, Ventech Engineers, signed the final major contract, covering installation of process modules, related piping and ancillary equipment, for ENVIA's Oklahoma City plant. Velocys has made available to ENVIA up to US$12 million of further funding as part of a stakeholder capital contribution, following which Velocys expects that this, its commercial reference pant, will be fully funded through construction, completion and operation. Fabrication of the modular process units is essentially complete. Mechanical completion of the gas-to-liquids (GTL) plant is expected in mid-year 2016. Read more…

Technology optimisation, improving plant economics

The company summarised the technological progress made over the preceding 18 months in an announcement on 26 November. Pilot plant tests demonstrated significant process intensification, increasing capacity and productivity and improving commercial plant economics. Advances demonstrated at the pilot plant were incorporated at early stages of the plant design for the Ashtabula GTL plant as well as the plants being developed by the company's clients.  Read more…

Settlement of UK IP infringement case

On 21 December Velocys announced that it had come to a settlement with CompactGTL in the patent infringement case that Velocys filed in the UK in 2013. Under the terms of the settlement CompactGTL will make an undisclosed one-off payment to Velocys in recognition of its intellectual property. Both the pending appeal by CompactGTL on validity of some of the claims and an enquiry by the UK High Court into damages have been discontinued. Read more...

On the conference circuit

Neville Hargreaves, Business Development Director, will present at the Energy from Waste conference in London on 24 February.

In the press

News of David Pummell's appointment as CEO was reported by Proactive Investors, Rigzone, and Energy Voice, amongst others. On hearing of the appointment all the analysts covering Velocys maintained their recommendations on the company. The recommendations and target prices from Numis, Canaccord Genuity, Macquarie and Peel Hunt are respectively: "Buy" (189p), "Speculative Buy" (130p), "Outperform" (105p) and "Hold" (100p).

In November, Red Rock Biofuels (RRB), that intends to incorporate Velocys' technology at the 1,100 barrel per day biofuels-to-liquids plant it is developing in Lakeview, Oregon, USA, announced its intention to merge with Joule Unlimited, Inc. Joule is pioneering the production of ultra-low carbon fuels from recycled CO2, and a demonstration unit will be co-located at Lakeview to explore how to further improve the economics and already favorable CO2 footprint of this project. The merged company is "poised to begin construction of its first refinery located in Lakeview, Oregon in early 2016". Flagship, which has an interest in both companies and which now has Brian Baynes leading the merged entity, has been both RRB and Joule's main investor. Also in November, the Oregon-based Herald and News reported that RRB had "signed two agreements with Lake County and is moving forward with its $200 million biofuel facility in Lakeview".

In November, GreenAirOnline reported on the GreenSky project following the news that the project developer, Solena, had filed for bankruptcy in the US. The article, which quotes Jonathon Counsell, Group Head of Sustainability at British Airways' parent company IAG, reports "British Airways says it remains committed to pursuing the MSW to jet fuel pathway and is talking to other companies in the field but believes a current lack of government support has contributed to the delay of the project." Velocys welcomes this commitment and continues its efforts to find another route to such a waste-to-jet fuel plant in the UK that incorporates the company's technology, using a different gasification technology provider and project developer.

Neville Hargreaves, Velocys' Business Development Director, wrote articles published this quarter in Automotive Management entitled "Diesel - the cleaner way" and in LNG Industry, which discusses the relative merits of LNG and GTL.

DigitalLook and Lube Report reported on the announcement made on 26 November summarising the recent technical progress made by Velocys. In a BRR Media webcast, Dr Paul Schubert, Chief Operating Officer, explained how a greater than 50% increase in capacity was achieved (while simultaneously maintaining the superior yields of desired products) largely due to improvements in the details in the reactor manufacturing process. These manufacturing improvements have been locked into build protocols for the company's commercial reactors that will be used at ENVIA Energy, Ashtabula, and other proposed plants in the sales pipeline.

Interactive Investor and Investors Chronicle, amongst others, covered the resolution of the company's outstanding intellectual property dispute in the UK with CompactGTL and Velocys' continued focus on the commercial roll-out of its technology.

Elsewhere, ENVIA Energy received Keep Oklahoma Beautiful's Vanguard award at a ceremony held on 30 November. A video produced for the event can be viewed here. In their 3 December issue Shares Magazine published an extensive article on what they describe as "the power problem", and covered how GTL can fit with the new age of gas.

Company news

In addition to the changes at Board level, we welcomed Peta Williams and Johan Malan to our team based in Houston where they have taken on the two key positions of Senior Process Engineer and Commissioning Manager respectively. They both join Velocys after gaining more than a decade of GTL and coal-to-liquids experience with Sasol.

Peta's experience spans R&D, engineering, commissioning, start-up and commercial plant technical support. She spent the past four years as Lead Process Engineer for GTL fuel and chemical process units for several GTL projects at Sasol's Technology Licensing division. The focus of her career has been on Fischer-Tropsch and the upgrading of unconventional hydrocarbon sources to high value fuels and chemicals. She will support Velocys' delivery of commercial GTL plants by leading new engineering studies.

During Johan's tenure with Sasol he gained extensive experience in both pilot plant and commercial scale operations. He was involved in the design, fabrication, start-up and operation of a range of units and technologies including a modularised regeneration system and culminating with the successful start-up of the Escravos GTL plant in Nigeria. We are pleased to have Johan on board as Commissioning Manager as part of the ENVIA project team. Johan will take a lead role in finalising procedures and protocols for commercial operation after which he will mobilise to the Oklahoma City site where he will take the lead during commissioning and start-up to ensure successful operation of the facility.

The company's web site,, has had a refresh in the last quarter, including the addition of a page answering questions that are often asked by our investors.

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Velocys plc trades through its subsidiaries Velocys, Inc., 7950 Corporate Blvd, Plain City, Ohio 43064, USA (Registered in the State of Delaware, USA) and Velocys Technologies Ltd, 115e Olympic Avenue, Milton Park, Abingdon, OX14 4SA, UK (Registered in England No. 5258554). "Velocys", "Think Smaller" and the Velocys logo are trademarks of Velocys. © 2016 Velocys. All Rights Reserved.